BEIJING: China’s BAIC Group is seeking to buy a stake of up to five per cent in Daimler as a way to secure its investment in Chinese Mercedes-Benz manufacturing company Beijing Benz Automotive, sources familiar with the matter said.
BAIC informed Daimler of its intention to buy a 4-5pc stake in the German maker of Mercedes-Benz cars earlier this year, sources said.
BAIC has asked local authorities in Beijing to support a 4-5pc stake purchase. BAIC has started acquiring Daimler shares on the open market.
“Daimler’s share price is currently being underpinned by a buyer who appears to be building a stake,” a source said.
It remains unclear whether BAIC can raise the nearly three billion euros that a 5pc stake in Daimler would cost, based on the German carmaker’s closing market value on Friday of 57.6bn euros, sources said.
German regulatory filings do not show BAIC as a significant shareholder of Daimler. German takeover rules allow a buyer to acquire a stake of up to 3pc before a regulatory disclosure is required.
Daimler has ruled out issuing new stock to help an outside party build a stake, forcing potential buyers to acquire shares on the market.
BAIC signalled its interest in buying a Daimler stake as far back as 2015, and has redoubled its effort after Li Shufu, chairman of rival Chinese carmaker Zhejiang Geely Holding Group built a 9.69pc stake in Stuttgart-based Daimler in early 2018.
By using Hong Kong shell companies, derivatives, bank financing and structured share options, Li kept the plan under wraps until he was able, at a stroke, to become Daimler’s single largest shareholder.
The Germans in March agreed to build the next generation of Smart-branded city cars together with Geely, which is based in Hangzhou.
Daimler has also reassured BAIC that any new industrial alliances involving Mercedes and a Chinese partner would only happen after a consensus is found with BAIC.
Daimler has several ventures with local partner BAIC in China. In March, Reuters reported that Daimler had tapped Goldman Sachs Group for exploratory plans to increase its stake in BAIC.
Bloomberg also reported in December that Daimler was in talks with BAIC to increase its joint venture stake to at least 65pc from 49pc, citing unidentified sources familiar with the matter.